Real Selling Starts When the Customer Says "No"

This week I got the biggest NO of my entire sales career. It was delivered not from the official channels but through some personal relations, although from the “right people”. Question is what do I do now?

Before I share with you some thoughts on the subject, let me tell you what I did last time I got the BIG NO and see what we can learn from that experience. That case looked bad from start; we came in barely at #3 after a well know competitor, who was in the lead. Being a bit of an eagle salesman (at least when it comes to preparing…) I went to the customer and posted all the tools of Solution Selling on the presentation wall and walked them through the process. This impressed them very much. Then somehow we lost pace and precision in our proposition, so the deal was lost to this well know competitor, “company A”. Part of the reason for this was that “company A” had insiders who were top performers within the customer’s company, so the support for us was weak and limited to one person only. Despite the loss, as the weeks passed I started to call this customer again, just to check in and wish them well (maybe learn a bit or two). I was thinking also about how to reengineer their vision and create “FUD” (fear, uncertainly and doubt) in their minds. At the same time the customer was trying to close the deal with “company A”, but ended up in a long negotiation process, which stalled the deal. Finally one Friday, I went to meet my sponsor with a value proposition - by the book - and managed to turn the case around. We (my power sponsor and me) worked through the weekend and on Monday he went to his management team and “put his balls on stake for Solution Selling” (quote). We ended up winning one of the largest deals of my life at that point.

So back to the burning question; What do we (and certainly myself in this case) do when we get the BIG NO? Everybody loves a winner and everybody hates a bad looser. So my plan is to be the best looser they ever seen. I will still try to see all the members in the management team and discuss ideas. Now we are not a threat, we already lost. But what we can bring is fresh ideas, just to share. And maybe, just maybe, we can start reengineering the vision.

In conclusion; Sometimes you lose because you have not made the best sales effort, sometimes your product or price (or both) were inferior, and sometimes you were not with power. But as long as you have had the best intentions with the customer you can always comeback. Like one of my prospects put it: “Jens you never give up, do you?” 

Written by and posted with the permission of:
Jens Edgren, Lindgren Partners Solution Selling
+ 46 8 651 25 00
www.lindgren-partners.se

The "Column Fodder" Principle in Action

I received this story from a client who had recently gone through a Solution Selling® workshop:  What follows is a re-creation of the events that took place. The names have been left out to protect the successful.

“I was given a potential lead for a large customer by my CEO. I made the call and was easily able to get an appointment. I was excited about this meeting. Early in the meeting I was told that they had already been given samples and pricing from my competition - at least it was nice they were up front with me.  What they didn’t know what that I was familiar with the “column fodder” principle. They wanted to know what I could do for them. After a brief discussion, I determined that they were going to use me to negotiate with my competitor. During our discussion I saw one of the decision makers writing in a notebook from my competitor, at that point I realized that I had nothing to lose so I decided to react with what they probably would not expect. I closed my notebook, put it in my briefcase and stood up.  I thanked them for their time and said I didn’t want to waste any more of THEIR time as it seemed as if they already made their decision to go with my competitor. I said if they wanted to have a “fair” side by side comparison and look at our capabilities give me a call. I finished by saying that I didn’t want to be just another vendor they use, I wanted to be their exclusive vendor. Needless to say, they were stunned and asked me if I was really leaving. I turned, opened the conference room door and left. One person followed me and asked again why I was leaving. 

Again, I explained that it seemed that they made their choice and I didn’t want to waste THEIR time.

Also, I didn’t want them using my capabilities and prices to leverage a better deal with my competition.  He told me he respected my decision and asked if they put the project on hold and gave the time and access I need would I work with them. I said yes.They did. I did. And after we worked through an evaluation I made the sale.  Did it go 100% according to Solution Selling® principles? No, not 100%, but I was able to use the concept to navigate through this situation to turn around a Column Fodder situation to reengineer their vision and win the deal!”  

Epilogue: By understanding where the buyer is behaviorally and procedurally, we can make an educated business decision what to do.  It may be difficult to muster the courage to walk out, but now I know the power of understanding and applying the Column Fodder principle to my advantage. I can’t wait for another one!

Who We Negotiate With

Final negotiation is a critical part of the sale. In fact, one can execute perfectly during the sale but at the very end leave large amounts of money on the table. Especially in today’s challenging market conditions, the end of a sales cycle can create anxiety and even desperation. When this becomes systemic company margins suffer and in extreme cases companies go out of business. Now, as sellers we cannot take the entire blame but there are some things that we can do to help this situation.

First and foremost make sure that you are negotiating with the right person. One of the challenges we face is entering a negotiation with lower level procurement people. These people are not your friends. They are usually very well trained and often very shrewd negotiators. On top of that, they do not understand nor do they care that you will bring value, or that your offering is strongly differentiated, or even that their very own company has severe business pains that will only be solved by your solution! All they care about is getting a better price.

Try to get the line of business/power people that you have been dealing with throughout the sales cycle to join the negotiation, or better still bypass procurement and negotiate directly with them. Remember that if there is a conflict between procurement and true power, power wins every time.

Solution Selling Cartoon: If You're Not Ready to Walk, You're Not Ready to Sell

This is what happens when salespeople fail to prepare for a sales negotiation meeting with the customer…

You can find more tidbits of Solution Selling wisdom like this in the Solution Selling Fieldbook.

Solution Selling Essentials: The Value Cycle

Almost half (45%) of sales managers believe that their teams need improvement in their ability to sell the value of their solutions to customers, according to the latest survey conducted by CSO Insights. 

Sales Teams’ Ability to Sell Value and Avoid Discounting
(Copyright 2009, CSO Insights, used with permission.)

Why do so many salespeople struggle with selling value, and instead focus on price or product? Let’s illustrate some of the typical problems of many sales professionals with a hypothetical situation - we sometimes receive calls from clients that sound like this:

Sales Executive: “Our sellers discount too much!  They make too many concessions, and our margins are going down.  We need to be tougher negotiators.  Do you have a negotiation skill development program?”

SPI: “Yes, we do - it’s called Collaborative Sales Negotiations, and it uses very effective Solution Selling principles to help sellers to negotiate and close more profitable business.  That might be of some help to your team.  But do you mind if I ask you a couple questions first?”

Sales Executive: “Sure - what do you want to know?”

SPI: “First, why do you think your sales team is discounting so much?”

Sales Executive: “We’re under a lot of pressure to deliver some big numbers.  We need to win every piece of business out there.  Almost everyone is behind on their quota.  When customers push back on price, I think we are caving in too quickly, just to get the deal closed and on the books.”

SPI: “I understand - you have some challenging sales goals, and that’s encouraging people to push for an early close by conceding on price.  What else do you think might be contributing to the problem?”

Sales Executive: “Well, I know that our compensation plan doesn’t exactly help the situation.  It’s based on acheivement of volume goals, not margins, so there’s not enough incentive to keep the price high. If our reps think they can close the deal faster with a discount, they’ll go there every time.  We’re trying to manage that by reviewing every discount request before approving any of them.  The problem is, I’m having to review discounts for every single deal!  It seems like it’s the first thing our sellers think of when they get near a potential win.”

SPI: “I see - that must consume a lot of your time.  I notice that you haven’t mentioned selling value to customers - is that a factor?”

Sales Executive: “Of course, we try to sell the value of our products to customers.  We’ll even provide a return on investment analysis, if the customer requests one.  Not many do, though.”

SPI: “That’s intereresting - why do you think your customers aren’t asking for an ROI analysis?”

Sales Executive: “They are suspicious about our ROI calculations.  They see it only as a way for us to justify a higher price.  And we don’t like to do them, actually - they take time and are complicated.  If a client asks for an ROI, that tells me they are just delaying the decision and aren’t really interested in buying.”

SPI: “I see.  So, when you conduct an ROI analysis for a customer, you do it near the end of the sales cycle?”

Sales Executive: “If we do one, yes, usually.  But I think you’re missing the point.  What we really need are some strong negotiation tactics.  If we can get our people motivated to negotiate tougher, and give them some tips and techniques for doing it, I think that’ll cut down on these discounts. When can we schedule a workshop?”

SPI: (on mute) *sigh*

As this not-so-fanciful example illustrates, many factors can contribute to excessive discounting, including quota attainment pressure, compensation incentives and management practices.  But the most common factor, by far, is a general misunderstanding about what “selling value” really means.  Focusing on development of negotiating skills to solve a discounting problem is like treating only one symptom while ignoring the disease.

Negotiation skills are important, to be sure - that’s why we include essential negotiation planning tools in Solution Selling, and also why we offer an advanced negotiation skills program - but negotiating is but one of the skills required to maximize margins and reduce needless concessions and discounts. Top performing salespeople also master the ability to postition value effectively. The need for hard-nosed negotiation can be reduced greatly if the total value of your solution is understood by your customer.

What is “selling value”?

Value is defined simply as the perceived benefits less the expected investment. Too many salespeople wait too long to convince buyers that their solutions provide value. As a result, they usually end up making too many concessions, resulting in lower revenues and profits. A better way is to make value an integral part of the entire sales process. You should lead with value, verify the value you can deliver, justify the value to help close the sale, and measure the value received by the customer.

The Value Cycle

Lead with value: Selling value begins before you make the very first call, when you conduct research on your target prospect so that you can develop a value proposition to stimulate their interest. This is accomplished by extrapolating the value that an existing client is receiving, and helping your prospective buyer to estimate the value they might obtain if they were able to achieve the same or similar results.  We described the structure of a useful value proposition earlier in this blog. 

With increasing frequency, we are now seeing sales professionals conducting far more detailed value analysis before their first call with target prospects, especially for high-value B2B solutions.  The reason: in this period of economic uncertainty, prospective buyers perceive an extremely high level of risk in purchase decisions, and therefore, need an extraordinarily compelling reason to even consider any new project or initiative that requires investment.

In other words, leading with value is not only wise, it is probably now a requirement for achieving your sales goals.

Verify your value: In yet another post on this blog, we described how to use the 9-Block Vision Processing Model to diagnose a buyer’s pain. Proper diagnosis of your customer’s business problem allows you to ask quantifying “drill down” questions that help you verify or refine initial assumptions made when delivering your initial value proposition. During this verification stage, the initial proposition can be expanded as pains of other individuals in the buying organization are uncovered, and thus, increase and expand the potential value your solution could bring to that customer. 

Justify your value: If salespeople conduct a value analysis for their customer, it’s usually during the proof of concept or later stages of the sales cycle.  This is far too late, for this simple reason: the buyer’s motivation to share information declines after they develop a vision of the potential solution. 

At the beginning of a purchase process, when the prospect has a pressing business need, they are more likely to share information about their problem and the impact it is having on their organization.  This is why you should lead with a strong value proposition and then validate it with diagnostic conversations.  Once you have established a vision of a potential solution, however, your prospective buyer is more reluctant to share data which can then be used to justify a higher price to them! So, by leading with value, you are in a much better position to get a complete picture of the potential value your solution could bring to that buyer.

In addition, if salespeople do conduct a “return on investment” analysis, it usually isn’t a value justification (Value = Benefits - Investment) - more commonly, it is a cost justification (Price < Benefits).  This is a subtle but important distinction - a value justification focuses on the worth of of the solution to the customer, while a cost justification tries to rationalize the price being charged.

This is what a typical value justification should look like, with assumptions and sources documented:

Measure your value: Woefully, far too many salespeople fail to confirm the value that customers receive from the solutions they bought.  Sales professionals that don’t capture measurements of success of their solutions miss the opportunity to get credit for the value that they have delivered, which can result in additional sales to that customer.  Further, by reconnecting with customers and measuring the value they received, you can also generate new reference stories that can be used to stimulate the interest of additional customers, and generate new opportunities.

In summary, selling value means thinking about and capturing the potential benefits and improvements that you can provide to a customer at every step of the sales process - from before the very first call to well after the sale is closed.  Selling value should be embedded in every aspect of your sales activities, in a very practical sense.

If you are struggling with excessive discounts or with positioning value consistently throughout the entire sales cycle, you might want to consider mastering the Value Cycle, as part of your Solution Selling methodology.

Good luck and good selling!